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What are public services worth, and to whom ? Non-parametric estimation of capitalization in Pune

Somik Lall and Mattias Lundberg ()

No 3924, Policy Research Working Paper Series from The World Bank

Abstract: The availability and quality of basic public services are important determinants of urban quality of life. In many cities, rapid population growth and fiscal constraints are limiting the extent to which urban governments can keep up with increasing demand for these services. It therefore becomes important to prioritize provision of those services to best reflect local demand. The authors present a strategy to estimate the demand for public services, which is sensitive to heterogeneity in preferences across types of households, and the nonparametric estimation addresses problems arising from functional form restrictions. Using data from Pune, India, they estimate the demand for public services, as represented by the marginal change in the self-assessed monthly rental price of dwellings from the services. The authors find that the value of publicly provided services accruing to the poor is greater than that going to wealthier households, and even untargeted across-the-board investment in specific services can be progressive.

Keywords: Housing&Human Habitats; Public Sector Economics&Finance; Municipal Financial Management; Economic Theory&Research; Public Sector Management and Reform (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-ure
Date: 2006-05-01
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